Finance Minister Nirmala Sitharaman and RBI Governor Sanjay Malhotra have said that the recent rise in gold and silver prices is being closely watched, but there is no immediate cause for concern.
Responding to a question on whether the sharp increase in precious metal prices is worrying, Sitharaman said India depends entirely on imports to meet its gold demand.
“All gold which comes from the market is imported. We get every ounce of gold which comes into the country,” she said.
She pointed out that India does not have enough domestic resources for exploring and extracting gold. While some steps are being taken to improve this, they are not sufficient to meet the country’s demand.
The Finance Minister said gold has always been a favoured investment for Indian households. Demand often rises during festival seasons such as Akshaya Tritiya and other auspicious occasions. She said this seasonal pattern is normal and well known.
“We are watching it. But I am not sure it has reached such alarming proportions,” she said, adding that buying gold is part of India’s natural consumption pattern. According to her, purchases have not gone beyond a certain limit so far. She also said the RBI is monitoring the situation.
CENTRAL BANK BUYING PUSHING PRICES HIGHER
Sitharaman said the current spike in gold and silver prices cannot be seen only from the Indian consumption angle.
She highlighted that many central banks across the world are buying gold and silver in large quantities and adding them to their reserves.
Earlier, global gold prices were largely influenced by high demand from countries like India and China. However, she said the current rise is largely due to central banks buying and storing gold in big numbers.
She said this global buying is pushing up international prices much beyond the usual fluctuations seen in the market. As a result, Indian households are facing higher prices for gold and silver even though their buying pattern remains seasonal and traditional.
RBI SAYS IMPORTS STABLE TILL DECEMBER
Adding to her remarks, RBI Governor Sanjay Malhotra shared data on gold imports. He said that from April to September, in value terms, there was hardly any increase in gold imports. The value rose only marginally, by about $1 billion, from around $49-50 billion.
He explained that despite rising global prices, the overall value of gold imports did not increase significantly till December because higher prices were largely offset by lower volumes of imports.
“It’s only in January that there has been a sudden spurt in value as well as in volume. We are still analysing those numbers,” he said.
Malhotra also underlined that gold demand in India is subject to seasonality and fluctuations. He said the central bank is not unduly concerned at this stage.
The RBI Governor said India’s external sector remains robust. The current account deficit is projected to be within or about 1% of GDP, which he described as manageable.
He indicated that even with some rise in gold imports, the broader macroeconomic indicators remain stable. Therefore, the recent jump in gold and silver prices is not seen as a threat to economic stability at this point.
Both the Finance Minister and the RBI Governor made it clear that while the government and the central bank are monitoring developments, the rise in precious metal prices is being viewed in the context of global trends and India’s seasonal consumption pattern.
